The VBA Legislative Blawg is the law-related blog of Bob Paolini our government relations guru at the VBA. Bob will keep you apprised of the happenings in the Legislature and keep members up-to-date with pressing legal issues affecting the practice of law in Vermont

Wednesday, April 29, 2015

H 489, the revenue bill and H 490, the budget bill are done
and on the Notice Calendar. Action will occur Thursday and Friday; then both
will go into conference with the House, hopefully late Friday. This sets
adjournment for two weeks from Friday.

In H. 489, sections 33 and 34 contain the new fees that
support the addition back of the 500K the administration wanted to cut. The language
is on pages 29 to 35 of Addendum 1 to today’s Senate Calendar here:

to the State of Vermont of such an extension, and contrast
those impacts with

the short- and-long term projections of Vermont’s current
sales and use tax

revenues without the changes in the proposal.

In 490, read E. 204; this contains some of the "lighten
the load" language the judiciary wanted. It also includes a statement of
intent in E. 204.15 supporting filling the judicial vacancies. See pages 89-93
of today’s Addendum 2 to the Senate Calendar:

Here are the funding provisions for the judiciary in the
Senate version (see Sec B. 204):

Sec. B.204 Judiciary

Personal services 35,212,260

Operating expenses 8,683,467

Grants 76,030

Total 43,971,757

Source of funds

General fund 38,465,850

Special funds 2,667,462

Tobacco fund 39,871

Federal funds 473,301

Interdepartmental transfers 2,325,273

Total 43,971,757

The Senate increased the funding by $758,000 over the total
passed by the House. As I said above, we’re waiting for floor action tomorrow and
Friday, followed by a committee of conference. It’ll be a while.

Tuesday, April 28, 2015

So I just returned from the Senate Finance Committee where I
was the first of 21 witnesses to testify about the latest draft of the tax
bill. I commented on sections 49-54, the extension of the sales tax to
services. I know some of you have already written to your senators stating your
opposition and for that we thank you. I did not want to address the issue of
the increased administrative burden on you if the tax is enacted. Instead, I
went after language in the bill that I found confusing and troubling. Here’s
some of what I said.

In Sec 49, the definitions section, “business to business”
transactions are exempt. Over lunch today talking with a local lawyer he raised
the following hypothetical. If he were to do title work, for example, for a
husband and wife he would need to collect a sales tax. But if that husband and
wife were to form an LLC or partnership, they would be exempt from the sales
tax!

If “business to business” transactions are exempt that would
mean that the tax would only apply to individuals who are perhaps the least
likely to be able to absorb and afford such a tax. The tax would apply to a
victim of domestic abuse hiring counsel to represent her. It would apply too a
custodial parent trying to collect child support or enforce an order of the
court. It would apply to the landlord trying to evict a tenant after going months without collecting any rent. Likewise, it would increase the cost to a
tenant who needed representation in a case on uninhabitable premises. I told
the committee that taxing Vermonters such as these is bad public policy and will only increase the number of self-represented litigants in an already
overburdened court system.

Also, if you look at Sec. 54 there is troubling language
that sets the tax rate at 4.75% “of the sales price charged…” Really? Is the
tax on the amount billed or the amount actually collected? We all know those
numbers are rarely the same.

Finally, I raised what I consider to be a constitutional
issue in criminal cases. If I were to exercise my 6th Amendment
right to “have assistance of counsel” in my defense, can the state tax me on
what I pay my attorney? Isn’t that a tax on exercising my rights? Is it any
different than taxing lobbyists and their clients?

In any event I think the committee will leave us in the bill
as there is hardly time for deliberation, discussion and amendments now. The
committee is hoping to vote the bill out tonight! Then it’s off to conference
where I expect and hope the services tax goes away. The budget bill can’t be
finished without knowing what the tax bill will raise. The capital bill can’t
be finished until the budget is done. Stay tuned. As always, thanks for
reading.

Monday, April 27, 2015

I received
the following from the Chair of the Senate Finance Committee on Saturday. I am
planning to testify at 1 PM on Tuesday but wanted all VBA members to be aware
of what the committee will be discussing. Now is the time for each of you to
weigh in if you have an opinion on this. Here is a link to the membership of
the Finance committee; if any of these senators represent you please let them
know how you feel about extending the sales tax to services. http://legislature.vermont.gov/committee/detail/2016/25

You are receiving this because you have expressed interest
in this year's legislative revenue discussions as it relates to you, your
organization or business, or your clients. Senate Finance has been taking
testimony on and off all session on various tax considerations. As we move
closer to a vote on a revenue plan, we have reserved two three hour time slots
on Monday and Tuesday of this week for overall comment from interested persons
on the draft bill, H.489. The meetings will be this Monday from 3-6pm and
Tuesday from 1-4pm in Rooms 10 or 11.

We welcome specific or general comments about the FY2016
revenue plan, which primarily features the income tax revisions, and the FY2017
changes which primary relate to an expansion of the consumer sales tax and
lowering the sales tax rate from 6% to 4.75%.

Monday, April 6, 2015

I apologize for having been silent on events in the
legislature for the month of March. Due to a death in the family I spent the
month in New York. VBA President Dan Richardson covered for me and devoted more
time to our presence in the statehouse that he expected when he became
President. The following summary on the judiciary funding issue is his.

As you all may already know, the House Appropriations
Committee passed H. 490 two weeks ago that did three things affecting our
conversation: 1) it created a study group that will work this summer to look to
see how systematic changes can create the savings sought by the legislature and
the administration; 2) It cut $500,000 from the judiciary’s budget but restored
it for FY 16 with one-time money equal to $500,000; and 3) it implemented the
proposed $600,000 pay act cut and the $900,000 in underfunding of existing
judiciary obligations. Notwithstanding
these cuts, the partial restoration of funds and the study group felt like a
big lift from the house that was, as I explained at the last meeting, just ready
to slash the budget and let the judiciary deal with it. These changes reflect a lot of efforts on the
VBA’s part and on members’ part to persuade legislators of the problems.

Whether these cuts will stay in the Senate’s version is less
clear. Last week, I testified in Senate
Judiciary, and the Committee seemed supportive of walking back these cuts. Senator Tim Ashe, in particular, was upset
with the idea that the $500,000 being called “bridge funding.” As he put it, a bridge is supposed to take you
across that chasm and not drop you in the middle.

The Judiciary is not happy with the budget because of the
$500,000 cut to their base budget, which without this year’s one-time funding
will become a hole for them next year and every year thereafter to fill or
cut. In other words, the Judiciary
understands that the one-time funding allows them to dodge a bullet this year,
but it comes with a price tag that any budget discussion next starts with a
base budget at this lower amount. That
means, the Judiciary, under the House bill, has less than one-year to come up
with a permanent $500,000 cut to its budget for next year’s budget
process.

More importantly, the $1.5 Million in cuts to the pay act
and from the underfunding remain, which pose a serious problem for the Court
beginning July 1st. The Judiciary’s
remaining focus for the year is to undo the $500,000 cut (more semantics than
actual money swapping since the money is already there for FY16) and to fight
to restore the $600,000 through a mixture of fee increases and restoration of
some pay act funds. If successful, that
would keep the Judiciary where they are now, underfunded and relying on vacancy
savings but able to fund its current operations. As I pointed out to Pat Gabel, the Chief, and
Judge Grearson the problem is that now the Administration and the House are
lined up behind this budget and the Judiciary will not only have to persuade
the Senate to disagree these cuts but take the fight to the house and the
Administration. It is a tall order.

The judiciary is supportive of the summer study/working
group.

Despite opposition, the videoconferencing arraignment pilot
project looks like it will be going forward.
The House bill provides funding for a pilot project, and the Judiciary
has begun to move forward. They have
also heard the message from several corners, including the VBA, that they need
to work with the various partners on this project.

The big news according to Pat is that the Administration has
made it very clear that they want the long-term cuts to come from courthouse
closures. Pat has stated in no uncertain
terms that the Court does not support closing courthouses and will fight to keep
them open, but that the Administration sees closing some courthouses as a
necessary budget cut. Pat reported to me
that the Administration made no bones about it, and that they would keep the
budget pressure on the Judiciary until it closes courthouses. The important thing to keep in mind is that
when we are talking about closing courthouses, we are also talking about laying
off the court staff.

Judge Grearson is making out next year’s trial court
rotation schedule, and he reported that with the four current vacancies
unlikely to be completely filed by September 1st, the rotation schedule is
going to have a lot of holes in it.
These gaps will largely fall to the civil docket as resources will have
to go to family and criminal. Even if
the Governor makes new appointments, the new judges will take time to close
their practices and receive training.
Grearson estimates a 4 to 6 month process to put the new judges on the
bench, hearing cases, after the appointments are made. On top of this, Judge
Grearson indicated that there might be more vacancies coming in the late
summer/early fall. So this is a problem
that may get worse before it gets better.